Don’t let bad credit history repeat itself

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Harsh Roongta: Nov 19 2012, 03:10 IST

I have often come across friends boasting, “My credit score is higher than yours,” and those on the “lower” end of the comparison want to have higher scores. Then there are past defaulters who wish to be considered for a loan and complain that banks turn down their application even after they have settled all outstandings in full and even improved their scores. In many cases they are indignant that they have now settled all the over dues, hence should get access to loans.

Past defaulters

Let us take up the case of the past defaulter first. Let us suppose you are in the money lending business and a potential borrower has approached you for a loan. Would you lend to this individual knowing fully well that he has delayed payment in the past to another money lender and only settled a part of the amount of overdue interest to the lender? Even if he had settled his outstandings in full along with overdue interest, would you still lend to him?

Like any sensible businessman you will wait for a while till he shows better record with someone else before you lend him money. This is exactly how one who is placed in this category of borrower should do: First, settle all outstanding payments. Even you settle, do not expect an overnight increase in your ability to borrow more. You will need to slowly rebuild your history. The best way is to get loans that are available despite your adverse credit

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